Origin of the Report
This report is prepared to fulfill the partial requirement of the course Human Resource Management (J201). This report is supposed to be prepared through the analysis of various or focused HR activities in local successful organizations. The different aspects of Human Resource Management, which we learn in theory, should be compared with the real life scenario on the basis of practical implications.
This report looks at various aspects of HRM of two local organizations. The organizations chosen, “Grameen Phone limited” and “Aftab Bahumukhi farm limited, are market leaders in their own respective fields. The company backgrounds are later provided to enhance the application of different HR functions.
Objectives of the Report
- To realize the concept of Human resource Management in real life context.
- To associate practical work scenario with theories and book definitions.
- To achieve the true & practical picture of human resource managerial functions in organizations.
- Understanding the human resource management problems and prospects in the surveyed organizations.
- To know how the HR departments manage their activities.
- To get an in depth idea of the core HR functions of recruitment and selection, motivation, performance appraisal and rewards & compensation.
- To compare the activities of two different local organizations, one with a HRM department and one without.
Choice of the Organizations
In our survey we chose Grameen Phone Limited and Aftab Bahumukhi Farm Limited. Among these two, Grameen Phone Limited has a well defined human resource department. While Aftab Bahumukhi Farm limited does not have any. It is noteworthy that both of these firms have been the market leader in their respective fields. Our main reason to choose these two companies is to compare their work pattern in specified fields of human resource management, such as recruitment and selection, motivation, performance appraisal and rewards & compensation. For our survey we did not choose any multinational company because we felt that a comparison between the nature of activities of the HR departments of a multinational company and a local company would have been unfair, as the HR concepts in the multinational companies are different from the local companies.
The focus of the report is mainly on specified human resource management functions undertaken by the organizations.
The main focus of the report has been the core Human Resource functions of recruitment and selection, motivation, performance appraisal and rewards & compensation. However, other issues, for example, Health & Safety and Environment etc. were also highlighted.
The report is entirely highlighted by the linkage between book definition of human resource management and its practical implications. Different aspects of HR functions have enriched the knowledge of the surveyors as well as put up the present and practical human resource management scenario.
A detailed questionnaire was designed, which had only open-ended questions. Several Interviews were conducted with the Head of Recruiting and Selection, Grameen Phone Limited and Director, Islam Group of Industries.
We used both primary and secondary data in this study. As a primary source we used a questionnaire. For this purpose we adopted Interview method to collect data.
Primary Data Collection
The primary data was collected through the interviews. Organization and the functional process were directly observed by the surveyors.
Secondary data collection
Secondary data were collected from different books. Different managerial concepts, theories and views were taken under consideration. The views expressed in our text by De Cenzo and Robbins was specifically given importance.
Case Study Analysis
A few case studies were taken under consideration to enhance the different scenarios of HRM problems. These eventually, did help us in the completion of this report.
The methodology of the study particularly includes the evaluation of the following:
- Employee selection and development
- Compensating the workforce
Prior to analysis, data collected from various sources were processed further for making them suitable to the needs of the present study.
Collected reports, books, interviews are analyzed in the light of the standard managerial practices. The policy issues are linked with human resource management. HR thoughts of De Cenzo and Robbins are greatly employed here.
This report on “A HRM Outlook of Aftab Bahumukhi Farm Limited and Grameen Phone Limited” is mainly based on primary and secondary data collected from various sources. Therefore, since our objective was to achieve the true & practical picture of human resource managerial functions in organizations, we might not have been able to achieve our goal.
Some of the data collected through interview may have the problems like errors of leniency, central tendency, and halo effects and information concealment.
Reluctance of revealing true managerial problems might also have affected our analysis & findings.
Recruitment and Selection
Recruitment refers to those sets of activities an organization uses to attract job candidates possessing the appropriate characteristics to help the organization reach its objectives. In general recruitment is attracting both of who will be selected and those who will not be selected.
Goals of Recruitment
For the recruiting process to work effectively there must be a significant pool of candidates to choose from. It is not always easy to gather competent applicants from a tight labor market. In western countries there are examples of giving extra incentives to some who applied for the job. But in our country this scenario is highly uncommon. The main goal of recruiting is to communicate the position in such a way that job seekers respond. The more applicants are received, the better the recruiter’s chances for finding an individual who is best-suited to the job requirements. Simultaneously the recruiter must provide enough information about the job that the unqualified applicants can self select themselves out of the job candidacy. This will avoid many hazards of time wasting & cost. A good recruiting program should attract the qualified and not the unqualified. Meeting this dual objective will minimize the cost of processing unqualified candidates.
Factors Affecting Recruiting Efforts
Among the factors that affect recruiting efforts size is one of the main factors. An organization with 100,000 employees will find itself recruiting continuously. Employee conditions in the community where the organization is located will influence how much recruiting takes place. The effectiveness of past recruiting efforts will show itself in the organization’s historical ability to locate and keep people who perform well. Organizations that are not growing or those that are actually declining will find little need to recruit. Working conditions and salary and benefit packages offered by the organization will influence turn over and, therefore, the need for future recruiting.
So basically the quality if recruiting efforts has a dual impact on the selection and placement of employees. First, recruiting determines the number of applicants applying for each position. Selection methods work best when the number of people hired is small in comparison to the number of people screened.
Second, recruiting methods directly affect turn over rates. When job candidates are given an unrealistically glowing picture of a job, they later become dissatisfied with reality that does not live up to promises. The ensuing dissatisfaction often results in turn over.
Constraints on Recruiting Efforts
Constraints on recruiting efforts are the factors that can affect maximizing outcomes in recruiting. These limit managers’ freedom to recruit and select of their choice. However, we can narrow our focus by suggesting five specific constrains.
- Image of the organization: it is noted that the prospective candidate may not be interested in pursuing job opportunities in the particular organization. If the image is perceived to be low, the likelihood of attracting a large pool of applicants is reduced. Therefore the image of the organization should be considered a potential constraint.
- Attractiveness of the job: if the position to be filled is an unattractive one, recruiting a large and qualified number of applicants will be difficult.
- Internal organizational policies: internal organizational policies, such as “promote from within wherever possible,” will give priority to individuals inside the organization. Such policies, when followed, will usually ensure that all positions other than the lowest-level entry positions will be filled from within the ranks. Although this is promising once one is hired, it may reduce the number of applications.
- Recruiting costs: the last constraint, but the certainly not the lowest in priority, is one that centers on recruiting costs. Sometimes continuing search for long periods of time is not possible because of budget restrictions.
Candidates for job vacancies can be found almost anywhere. The most effective recruiting efforts are continuous. During periods when job vacancies are few, the effective organization still communicates with prospective job candidates for the future. The key recruiting sources are
- Internal Search Methods:
- Referrals by present employees
- Present employees.
- External Search Methods:
- Secondary and vocational schools.
- Colleges (as evidenced by the college placement office).
- Private and public employment agencies.
- Executive search firms or head hunters.
- Applicant files.
- Field recruiting trips.
- Professional association placement services.
Internal Search Methods
A good starting point in recruiting is to look within the organization.
- Referrals by present employees: Employees who are satisfied with the organization are often willing recruit friends, neighbors, relatives, providing the present employees are aware of job openings.
- Present employees: One recruiting approach is to recommend the transfer or promotion of employees who immediately come in mind. Another approach used by larger organizations is to search through a skilled inventory.
The advantages of such searches – a “promote from within wherever possible” policy- are
- It builds good public relations.
- It builds moral.
- It encourages good individuals who are ambitious.
- It improves the probability of a good selection, since information on the individual’s performance is readily available.
- It is less costly then going outside to recruit.
- Those chosen internally already know the organization.
- When carefully planned promoting from within can also act as a training device for developing middle & top-level managers.
There can be distinct disadvantages, however, to using internal sources. They are:
- Limited number of candidates.
- Low Quality of candidates.
- No new knowledge.
- Selection hurdles.
- Dangers of inbreeding come into play.
External Search Methods
In addition to looking internally for candidates, it is customary for organizations to open up recruiting efforts to the external community. These efforts include advertisements, employment agencies, college placements, professional organizations, unsolicited applicants, etc.
- Advertisement is materials communicating to the general public that a position in a company is open. However where the advertisement is placed is often determined by the type of job. The higher the position in the organization, the more specialized skills, or the shorter the supply of that resource in the labor force, the more widely dispersed advertisement is likely to be. On the other hand, the advertisement of lower level jobs is usually confined to the local daily newspapers or regional trade journals.
A number of factors influence the response rate of advertisements. There are three important variables: identification of the organization, labor market condition, and the degree to which specific requirements are included in the advertisement. Some organization place what is referred to as a blind-box ad, one in which there is no specific identification of the organization. Respondents are asked to reply to a post office box number or to an employment firm. This is because the organization does not wish to publicize the fact that it is seeking to fill an internal position.
- Employment Agencies are of three forms:
- Public or state agencies.
- Private employment agencies.
- Management consulting firms.
All states provide a public employment service. The main function of these agencies is closely tied to unemployment benefits. State agencies are perceived by prospective applicants as having few high skilled jobs and employers tend to see such agencies having few high skilled applicants.
The major difference between public and private employment agencies is their image; that is, private agencies are believed to offer positions and applicants of higher caliber. Private agencies may also provide a more complete line of services. The private employment agency’s fee can be totally absorbed by either the employee or the employer, or it can be split.
The third agency source consists of the management consulting, executive search, or “head hunter” firms. Agencies of these types are actually specialized private employment agencies. They specialize in middle level and top level executive placements, as well as hard to fill positions such as computer programmers.
- Secondary and vocational schools offer opportunities for recruiting recent graduates. Most educational institutions operate placement services where prospective employers can review credentials and interview graduates.
- College placements, while a good source of applicants, are costly to the company in terms of recruiter’s expenses in travel, lodging, and the like-that is, unless the school is in the organization’s area.
- Professional organizations or headhunters usually help organizations in recruiting mid-level and top-level management. In general they are a source of job applicants where placement facilities at regional and national conferences usually occur.
- Walk-ins are unsolicited applicants. They reach the employer by letter, telephone, or in person. This source does supply a excellent stockpiled employees. Even if there are no particular openings when the applicant contacts the organization, the application can be kept on file for later needs.
Goals of Selection Process
Selection process is the process of selecting the best candidate for the job. The goal of selection process is to make effective selection decisions. The managerial decision makers seeking to predict which job applicants will be successful if hired.
The Selection Process
There is more or less a standard pattern in most selection process, beginning with an initial screening interview and concluding with the final employment decision. The process is generally of seven steps…
- Initial screening interview
- Completing the application form
- Employment tests
- Comprehensive interview
- background interview
- A medical or physical examination
- The final job offer
Each step in the process seeks to expand the organization’s knowledge about the applicant’s background, abilities, and motivation, and it increases the information from which decision makers will make their predictions and final choice.
- Initial Screening is the first step in the selection process whereby inquiries about a job are screened. This initial screening is, in effect, a two-step procedure:
- The screening of the inquiries
- The provision of screening interviews.
The initial screening interview is an excellent opportunity for HRM to describe the job in detail including the salary range. Sharing job description information with the individuals frequently encourage the unwilling to back out from the process which will cut down the recruiting cost of the organization.
- Application form is a company’s specific employment forms used to generate specific information the company wants. Once initial screening is done applicants are asked to complete this application form. All the information given by the applicant in the form must be valid which is verified by HR personnel. If fount false the application form is rejected subsequently eliminating the applicant.
- Employment tests are taken in order to find out whether the applicant is suitable to fill the position. These tests can be oral or written or both. The recent trend is to add some work samplings in the employment tests. The key in employment testing is to use a test that accurately predicts job performance.
- The comprehensive interview is a selection device in which in-depth information about a candidate can be obtained. The applicant may be interviewed by HRM interviewers, senior managers within the organization, a potential supervisor, potential colleagues, or some or all of these. The comprehensive interview is designed to probe areas that cannot be addressed easily by the application form or tests, such as assessing one’s motivation, ability to work under pressure, and ability to “fit in” with the organization.
- Background Investigation is the process of verifying information job candidates provide. This can include contacting former employers to confirm candidate’s work record and appraisal of his or her performance;, verifying the educational accomplishments, verifying one’s legal status and criminal records and credit references.
- Physical/Medical Examination indicates whether an applicant is physically fit for essential job performance. This is only done when a conditional job offer is made. Physical examination can be used as a selection device to screen out those individuals who are physically unable to comply with job requirements. For examples firefighters need to prove that they are in a certain physical condition.
- Final Employment Decision is made when those individuals who perform successfully in the preceding steps are now considered to be eligible to receive an offer of employment. It is referred that this decision should ideally be made by the top level management.
Employment Test is any selection examination that is designed to determine if an applicant is qualified for the job. There are different types of employment tests. They are:
- Written test is an organizational selection tool designed to indicate whether an applicant will be successful on the job if hired. These written tests are mainly used to assess intelligence, abilities and personality traits of applicants.
- Performance simulation tests are mainly work sampling and assessment centers focusing on actual job activities. The single identifying characteristic of these tests is that they require the applicant to engage in specific behaviors necessary for doing the job successfully.
- Work sampling is a selection device requiring the job applicant to actually perform a small segment of the job. By carefully devising work samples based on job analysis data, the knowledge, skills, and abilities needed for each job are determined. Then each work sample element is matched with a corresponding job performance element. One disadvantage of work sampling is that it is not applicable to all levels of the organization.
- Assessment center is a facility where performance simulation tests are administered. These are made up of a series of exercises and are used for selection, development and performance appraisals. Here a more elaborate set of performance simulation tests specifically designed to evaluate a candidate’s managerial potential. The procedure of how an assessment center works is something like this:
- A small group of applicants come to the assessment center.
- The assessment center has approximately six to eight assessors, some of whom are trained psychologists, while others are managers at least two levels above the individual being assessed, who have been trained as assessors.
- Assessors, usually in pairs, observe and record the behavior of applicants in group and individual situation problems. A clinical psychologist summarizes the personality tests.
- Each assessee is rated on twenty to twenty-five characteristics.
- A judgment is made about the assessee’s potential for meeting the job requirements.
In any organization, success of employees is contingent on how well the employees perform in the job. HRM department in an organization as already known is responsible for carrying out all the tasks needed to ensure the satisfactory performance of its employees. A company can hire the most competent worker but there is no guarantee as to whether he/she will perform well.
Performance as we know is the effective and efficient work, which also considers personal data as measures of accidents, turnover, absence and tardiness. Motivation then becomes a method to activate the potential in each and every worker.
Motivation can be defined in terms of some outward behavior. People who are motivated exert a greater amount of effort on their tasks than someone who is not so motivated. Motivation can thus be defined as the willingness to do something, conditioned by the action’s ability to satisfy some need.
But an employee has to be motivated in accordance to the organizational goals which are done to meet the company objectives. Thus we can define it terms of an individual’s willingness to exert some effort to achieve organization’s goals conditioned by the effort to satisfy individual needs.
Individual needs are some internal state that makes certain outcomes attractive. It is a basic want or desire. The process of motivation occurs with an unsatisfied need. Based on such unsatisfied needs the state of deprivation occurs, which is a state of having unsatisfied needs. This state of deprivation results in tension. Tension can be both negative as well as positive. This positive tension known as functional tension is needed since it creates energy for the employee to perform.
After all the state of deprivation which leads to the creation of functional tension, some outward action directed to the attainment of some goals is exerted. This is called effort and is the basis of motivation. The amount of effort exerted depends on the level of motivation that an employee possesses.
If an individual’s efforts are successful in achieving the goals, then the needs are satisfied. This satisfaction will lead to a decrease in the state of deprivation which further leads to a calming effect over the tension caused due to deprivation. This process can be applied to the organization setting. If we motivate employees properly, then we can say that they are in a state of tension. In order to relieve this tension we can direct their activities toward organizational activity. The greater the tension the greater the drive to relieve it thus it leads to greater effort. However this process is interlinked and if any of the components are missing then the effort will decrease from the part of the employee and thus leads to unattained organizational goals.
Barriers to the Process
Because we are dealing with people there may be several barriers to the motivation process. The important barriers occur in the tension stage. The important barriers are:
As we have mentioned before that tension is good, on the other hand dysfunctional tension is bad. When our tension which results in our efforts, do not result in achieving the individual needs or goals, this state of unfulfilled needs leads to stress and other detrimental work behavior. This will lead to less effort and less drive and finally to unfulfilled organizational goals.
Apathy is that state where the dysfunctional tension is significant and results in no effort being made to achieve the organization’s goals. This is a state where maybe the manger has broken the spirit of the employee. The effort towards goal achievement will be zero.
Link between Motivation and Performance
Though there is a common misconception that high motivation leads to high performance, it is in fact but one set of factors that contribute to good performance and hence favorable outcomes to the organization. The relationship between these two can be explained using the following verbal equation:
Performance depends on motivational factors as well as on non motivational characteristics, group factors, and technological factors.
The Application of Reinforcement Theory
Worker motivation programs of positive reinforcement are direct applications of reinforcement theory. PR is based upon a fundamental premise of behaviorism called the Law of Effect: behavior that is rewarded tends to be repeated while behavior that is punished tends to be avoided. An individual’s behavior is a function of the consequences of that behavior.
Stages in the PR Program
There is a generalized model to apply the PR program. This is by:
1st step– set the standards
2nd step-agree upon reinforces
3rd step-observe performance and set goals
4th step-allow for feedback
5th step-dispense rewards
6th step-monitor results
A Model of Motivation
The motivation process is complex since there are so many factors to consider and since the face of organizations is changing so much. Thus businesses face a huge challenge to meet these objectives. Thus they may follow a model to help them to motivate the employees. The model is as follows:
This is essential since an organization hires an individual thinking that he/she will achieve the objectives of the organization. This relationship is based on the likelihood that putting forth the effort will lead to successful performance on the job. Specification of the effort required must be given by the HRM department. Furthermore the jobs have to be analyzed by the HRM department. Also this department should identify the requirements of the job incumbents. After this the HR department has to make sure that the employee has adapted to the organization, train them if necessary and so on.
Effort also implies job design in addition to ability. In order to facilitate the performance of the employee the organization has to make sure that the employee has the best possible equipment available to him/her. The right tools have to be available to the employee at all time. Also the necessary resources must be available at all times.
But the effort must be directed towards some end. This end is performance. The effort is directly linked to the performance. Thus HR department has to be trained in establishing work standards and communicating them to the employees.
Performance-Organizational Goal Relationship
Employee’s performances should be directed towards some goal. This relationship looks at the likelihood that the successful performance on the job will lead to the attainment of organizational goals. Organization’s needs cannot be fulfilled without the effort of the employee.
For this relationship to function effectively, the organization must set clear direction. Organization must set its plans for given time periods and communicate these plans downwards so that the employees have control over the performance measures. The employees should know what is expected of them, and they should know what goal performance is how it is to be determined.
HRM must ensure that performance evaluations operate properly.
Job Designs to Increase Motivation
The Job Characteristics Model
This is a framework for analyzing and designing jobs. This model identifies five primary job characteristics and their interrelationship. This model has become important since it can be used to design jobs according to the characteristics the employee possesses and in return motivate them.
This model specifies five core dimensions of a job. These are:
Skill variety- the degree to which a job requires a variety of different activities so one can use a number of different skills and talents.
Task identity- the degree to which the job requires completion of a whole and identifiable piece of work.
Task significance- the degree to which the job has a substantial impact on the lives of work of other people.
Autonomy- the degree to which the job provides substantial freedom, independence, and discretion to the individual in scheduling the work and in determining the procedures to be used in carrying it out.
Feedback- the degree to which carrying out the work activities required by the job results in the individual obtaining direct and clear information about the effectiveness of his or her performance.
According to a model which is given below, skill variety, task identity and task significance combine together to create meaningful work. That is if these three components are present in a job we can assume that the incumbents will view their job as being important, valuable and worthwhile.
Jobs that possess autonomy give the incumbents a feeling of responsibility towards their job and results. If the job provides feedback then the employees will know how effectively they are performing. Thus managers have to be certain that they provide timely feedback to the employees.
Also according to the model, internal rewards are obtained from the individuals when they learn that they personally have performed well on the job that they care about.
The more that these conditions are present the greater will be the employees’ performance, motivation and satisfaction and lower will be their absenteeism and turnover.
After the core dimensions are analyzed and combined into a single index called the Motivating Potential Score. Jobs that are high on the MPS- as derived from answers to questions for each dimensions – must be high on at least one of the three factors that lead to experiencing meaningfulness, and they must be high on both autonomy and feedback. If there is a high score on the MPS then motivation, performance, and satisfaction will be positively affected.
According to research:
a) People who work on jobs with high core job dimensions are more motivated, satisfied and productive than those who do not.
b) People with strong growth needs respond more positively to jobs that are high in motivating potential than those with weak growth dimensions.
c) Job dimensions operate through the psychological states in influencing personal and work outcome variables, rather than influencing them directly.
Thus these research findings can be considered as supporting the fact that the structure of the job is important in influencing the motivation level. The design of the and the way the work is considered are variables that:
- Management can readily influence.
- Can affect an employee’s motivation.
This is the process of expanding the depth of the job by allowing the employees to do more planning and controlling of their work with less supervision and more self evaluation. This process offers great potential.
However job enrichment is only successful if it:
n Increases responsibility.
n Increases employee’s freedom and independence.
n Organizes tasks so that employees go on to complete a whole task.
n Provides feedback to allow for correction of employee’s performance.
We can also say that these factors lead to a Quality of Work Life (QWL). Furthermore the process will be successful only if the employees find their needs are satisfied. A successful job enrichment program should ideally create employee motivation but in reality these programs actually reduce turnover and absenteeism. Thus organizations should in fact incorporate such programs so as to increase their employee productivity.
This is an on the job employee development technique. It offers a potential for dealing with the problem of general worker dissatisfaction caused by over structuring or career plateauing. This allows for diversification of employee activities and offset the occurrence of boredom.
Horizontal job transfers can break up the monotony inherent in almost any job after the employee’s skills are almost refined and the newness has worn off.
Anything new from new supervisors to diversification of jobs, learning new skills all reset the effect of boredom from jobs that have become habitual. Thus we can say that job rotation can renew enthusiasm for learning and can motivate workers to better performance.
Work At Home
Due to improvement of technological development more and more jobs are being performed by the employees at home. Since the advent of fax machines, PABX, internet and so on, it has become relatively easy to go on and perform the job at home. This is a motivational method for the employee’s point of view. On the other hand the organization has also an advantage over the fact that it is a cost saving technique.
Flexible hours mean having a flextime in the organization. Flextime is a scheduling system in which employees are required to work a number of hours per week but are free, within limits, to vary the hours of work. Under the process of flextime, employees assume the responsibility of completing the job and this increases the feeling of self worth. This is congruent with the philosophy that employees are getting their job done, rather than paying for their presence in the job setting.
Flexible hours attribute to decreased tardiness, absenteeism, job fatigue, increased loyalty and improved recruitment. But the advantages can be offset by the disadvantages which are inability to control and difficulty in evaluating.
Advantages of compressed workweek
- Improved performance and productivity
- Improved satisfaction and morale
- Reduced absenteeism
- Enhanced recruiting
- Lowered commuting costs
- Ease in scheduling extra hours of work
- Reduction of unemployment
Disadvantages of Compressed Workweek
- Complaints of fatigue
- Difficulties for working mothers
- Lowered productivity due to less service to customers
- Legal problems
- Chronic dissatisfaction
Motivational Challenges for HRM
Motivating Low Tech Employees
These types of employees can be motivated by providing respect, non financial rewards and autonomy. The organization first has to recognize the fact that these employees can change their perception of the company if they are given respect and recognition. Financial rewards may not be increasing for them but non financial rewards can help them to be motivated. Autonomy in their jobs will give them a lot of satisfaction as well.
Motivating High Tech Employees
The best possible way to motivate these employees is to provide delegation, enroll them in participative management, and provide job enrichment, challenging jobs and recognition. These employees are aware of the fact that they are essential to the functioning of the organization. Thus to them monetary rewards do not play a key issue.
Because performance evaluations aren’t the simplest process they once were, it is now more critical to perform them while simultaneously focusing on the key activities of the job. Since organizations exist to achieve goals, the degree of success that individual employees have in reaching their individual goals is important in determining organizational effectiveness, and thus is important the proper evaluation of the employees in their activities. Performance appraisal of an employee includes the ability of the employee to perform surveying tasks in a timely and accurate manner, his ability in interacting with customers, his ability to act as a mentor to new employees, and other similar aspects. More and more emphasis is now given to performance appraisal because it helps managers to compare the actual performances of the employees with their desired actions.
The process of performance appraisal, by definition, is a formal process in an organization whereby each employee is evaluated to determine how he or she is performing. Basically, it serves three major purposes. First, it can be used as a basis for reward allocations. Decisions as to who gets salary increases, promotions, and other rewards are determined by their performance evaluation. Second, these appraisals can be used for identifying areas where development efforts are needed. Management needs to spot those individuals who have specific skill or knowledge deficiencies. Finally, the performance appraisal can be used as a criterion against which selection devices and development programs are validated. A particular selection process may be successful in differentiating satisfactory performers from unsatisfactory performers. But there must be some standard of satisfactory performance. The development of a valid, reliable, and bias-free performance appraisal system can establish such standards.
An important determinant of the efficient performance of an employee is the motivation of the employee. Just because employees have the ability to do the job does not ensure that they will perform satisfactorily. Employees have to know what is expected of them, and they need to know how their performance will be measured. Furthermore, employees must feel confident that if they exert an effort within their capabilities, it will result in a better performance as defined by the criteria by which they are being measured. Finally they must feel confident that if they perform as they are being asked, they will achieve the rewards they value.
As a whole, if the objectives that individual employees are seeking are unclear, if the criteria for measuring that objective attainment are vague, and if employees lack confidence that their efforts will lead to a satisfactory appraisal of their performance or feel that there will be an unsatisfactory payoff by the organization when their performance objectives are achieved, individuals can be expected to work considerably below their potential. To capitalize employees in the most efficient way, managers must make sure that employees know what behaviors are required of them, understand how they are going to be appraised, and believe that the appraisal will be conducted in a fair and equitable manner, and that they can expect their performance to be recognized by proper rewards.
The Appraisal Process
The process of performance appraisal begins with the establishment of performance standards in accordance with the organization’s strategic goals. These should have evolved out of the strategic direction and, more specifically, the job analysis and the job description. The performance standards should also be clear and objective enough to be understood and measured. The expectations a manager has in terms of work performance by his subordinates must be clear enough in his mind so that he will be able to, at some later date, communicate these expectations to his subordinates and appraise their performance against these previously established standards.
Once performance standards are established, it is necessary to communicate these expectations. It should not be part of the employee’s job to guess what is expected of them. Unfortunately, too many jobs have vague performance standards. The problem is compounded when these standards are not communicated to the employee. It should be noted that mere transference of information from the manager to the subordinate regarding expectations is not communication. Communication only takes place when the transference of information has taken place and has been received and understood by the subordinate. The necessary feedback by the employee ensures that the information communicated by the manager has been received and understood in the way it was intended.
The third step in the appraisal process is the measurement of performance. Information of the actual performance of the employees is usually gathered by four common sources: personal observation, statistical reports, oral reports, and written reports. Each has its strengths and weaknesses; however, a combination of them increases both the number of input and the probability of receiving reliable information.
What we measure is probably more critical to the evaluation process than how we measure, since the selection of the wrong criteria can result in serious dysfunctional consequences. The criteria we choose to measure must represent performance as it was stated and articulated in the first two steps of the appraisal process.
The fourth step in the appraisal process is the comparison of actual performance with standards. The attempt in this step is to note deviations between standard performance and actual performance so that we can proceed with the fifth step of the process: the discussion of the appraisal with the employee.
One of the most challenging tasks facing managers is to present an accurate appraisal to the employee. The impression that employees receive about their assessment has a strong impact on their self-esteem and, very importantly, on their subsequent performance. It is understandable that conveying good news is considerably less difficult for both the manager and the employee than conveying the bad news that performance has been below expectations. In this context, the discussion of the appraisal can have negative as well as positive motivational consequences.
The final step in the appraisal process is the initiation of corrective action where necessary. Corrective actions can be of two types: immediate action and basic action. Immediate action corrects something right now and gets things back on track. Basic corrective action asks how and why performance deviated. In addition, good managers recognize that taking a little time to analyze the problem today may save more time tomorrow when the problem may get bigger.
No matter what the process is or who participate in developing the appraisal, each employee should get one and only one performance appraisal. Any inconsistencies in the evaluation input should always be reconciled by the appraiser prior to the actual appraisal session. Nothing is worse than handing employees a performance appraisal form with five different ratings in each performance category because five different people were consulted on his or her performance.
Another decision to consider when designing a performance system is who will see the final appraisal performance documentation after it is reviewed with the employee. It is usually a good idea to circulate performance appraisals through the reporting hierarchy as defined on the corporate organization chart. Also, another critical issue is to determine what type of training will be provided to those responsible for doing performance appraisals.
Management by Objectives
This is a system whereby the chief executive decides upon the objectives, which the firm will try to attain, in the long term and then in the next year or so. Having set his targets, he considers the constr4aints acting to inhibit achievement of these targets, and also asks himself how he will be able to tell when they are being met. Then he meats the managers who report to him, either in a group or singly, and tells him his thoughts. Targets, constraints, and measures are discussed for each subordinate, and objectives are formally agreed. The subordinate manager then go away to repeat the process with their own subordinates, and so on down the line. In addition to the first meeting to agree objectives, a regular series of review meetings is held at each level, for checklist progress and making alterations as appropriate.
When MBO works well, all the people in the organization share a common goal, and common commitment. Delegation is encouraged. Rivalries and duplication of effort are reduced. During disputes or times of uncertainty the laid down statement of objectives serves as a useful reference point.
The appraisal system looks so much like MBO, especially to someone used to MBO, that it is important to specify resemblances and dissimilarities. The basic meeting, reviewing past progress and setting future targets, is common top both systems. MBO, however, assumes that the meetings are dependant on one another in a continuous chain, starting at the top. MBO assumes a formal sharing of objectives between manager ad subordinates. In addition, some MBO systems generate a great deal of paperwork. Performance appraisal interviews can happen at any time, without waiting for the man at the top to begin the process. Objectives can be individual or personal, without any reference to the objectives of the appraising manager. And in practice there is much wider variety of individual styles tolerated in performance appraisal systems than there is in MBO.
At appraisal time the manager usually assigns an overall rating to the employee. Central salary planning functions find this rating useful to know, though there are organizations where salary grading is said to be a separate exercise. In fact, the link between performance appraisal and salary grading is controversial. Some experts believe that no mention of salary should be made during the interview; others say that salary should be discussed at the same time as the performance rating. And, irrespective of whether salary is discussed, there are those who say that a salary increase should follow soon after the interview, and others who say that it should be maximally distant.
Anyone studying the relationship of money and performance is soon struck by the large number of functions which money can fulfill — esteem, incentive, motivation, reward, freedom, status, etc. Part of the reason of the controversy surrounding any link between the appraisal interview and subsequent salary increase is the confusion about the different roles money can ply. Centrally or locally, salary grading and performance appraisal have impact on each other.
Most people have had experience of the situation where one man’s unfavorable opinion of the subordinate has unfairly influenced the subordinate’s progress. The element of measurement implicit in most appraisal systems sometimes makes employees fearful that any such unfairness is about to become institutionalized. For this ad other reasons many appraisal systems involve the appraising manager’s manager in the conduct of the appraisal. He may have to sign off the appraisal form before the interview, or afterwards, or both. He may actually take part in the interview himself. He may be the first line of defense in case of a dispute about the performance rating. Because he oversees the appraisal of a number of different managers, he is in a good position to see if any manager is idiosyncratic in his judgments, and to intervene if necessary.
Hand-Over between Managers
A manager taking over a new team, or accepting a transfer from another part of the firm, is greatly helped by having records of his team’s objectives, their past performance, and any special problems or ambitions they may have. Firms expanding fast, by internal growth or by acquisition, find the transition much easier if new managers do not have to play themselves in from complete ignorance each time. Indeed, the appraisal system can be a very positive weapon in the hands of the central management team if they are faced with the task of bringing some common standards and practice to a group of companies which have merged.
To Avoid Trouble
It is likely that firms will have to justify their reasons for making a particular promotion decision to the legal authority, if someone passed over by that decision believes that unfair discrimination on the grounds of race or sex was being practiced. Even without these legislative difficulties, many firms in high technology industries or in labor-intensive organizations find that their managers’ mistakes which matter are mistakes with people. The growth of sophisticated management service departments, central planning functions, and so on, has removed managers’ opportunities for mistakes in other areas; only in the mishandling of people are they still vulnerable.
It is a pity to have to recommend a tool like performance appraisal, which stands on its own as good management practice, and commend its usefulness in getting one out of trouble. But there is no doubt that performance appraisal systems have been used, and increasingly are used, as a way of handling poor performers so as to have the paperwork available to show an industrial tribunal.
There are three broad different approaches that exist for doing appraisals. Employees can be appraised against:
- Absolute standards
- Relative standards
No one approach is always best; each has its strengths and weaknesses.
In absolute standards appraisal, subjects are not compared with any other person. Included in this group are the following methods.
- The essay appraisal – Probably the simplest method of appraisal is to have the appraiser write a narrative describing an employee’s strengths, weaknesses, past performances, potential, and suggestions for improvement. The strength of the essay appraisal lies in its simplicity. It requires no complex forms or extensive training to complete, but its weaknesses are many. Because the essays are unstructured, they are likely to vary widely in terms of length and content. This makes it difficult to compare individuals across the organization. And of course, some writers are better than the others. However, the essay appraisal can provide considerable information, much of which can be easily fed back and assimilated by the employee. But this method provides only qualitative data, and HRM decisions improve when quantitative data, which can be compared and ranked more objectively, are generated.
- The critical incident appraisal – This appraisal method focuses the rater’s attention to those critical or key behaviors that make the difference between doing a job effectively and doing it ineffectively. The appraiser writes down anecdotes describing what the employee did that was especially effective or ineffective. It should be noted that this appraisal method cites specific behaviors only , not the vaguely defined personality traits.
The strength of critical incident method is that it looks at behaviors. Additionally, a list of critical incidents on a given employee provides a rich set of examples from which employees can be shown which of their behaviors are desirable and which ones call for improvement. However, one of its major drawbacks are appraisers are required to regularly write these incidents down, and doing it on a daily or weekly basis for all subordinates is time-consuming and burdensome for managers. Also critical incidents suffer from the same comparison problem found in essays: mainly, they do not lend themselves to quantification. Therefore the comparison and ranking of subordinates is difficult.
- The checklist appraisal – In the checklist appraisal, the evaluator uses a list of behavioral descriptions and checks off these behaviors that a[apply to the employee. Once the checklist is complete, the HRM staff, not the manager doing the checklist, usually evaluates it. Therefore the rater does not really evaluate the employee’s performance; he or she merely records it. An analyst in HRM then scores the checklist, often weighing the factors in re4lationship to their importance. The final evaluation can then be returned to the rating manager for discussion with the subordinate, or someone from HRM can provide the feedback to the employee.
The checklist reduces some bias, since the rater and the scorer are different, but the rater usually can pick up the positive and negative implications in each item so bias can still be introduced. From a cost standpoint, this appraisal method may be inefficient if there are a number of job categories, because a checklist of items must be prepared for each category.
- The adjective rating scale appraisal – These rating scales can be used to assess factors such as quantity and quality of work, job knowledge, cooperation, loyalty, dependability, attendance, honesty, integrity, attitudes and initiative. However, this method is most valid when abstract traits like loyalty or integrity are avoided, unless they can be defined in more specific behavioral terms. Although this method does not provide the depth of information that essays or critical incidents do, they are less time-consuming to develop and administer, they provide a quantitative analysis and comparison, and, in contrast to the checkli8st, there is more generalization of items so that comparability with other individuals in diverse job categories is possible.
- The forced choice appraisal – This appraisal method is a special type of checklist, but the rater must choose between two or more statements, all of which may be favorable or unfavorable. The appraiser’s job is to identify which is most (or in some instance4s the least) descriptive of the individual being evaluated. As with the checklist method, to reduce bias, the right answers are not known to the rater, someone in HRM scores the answers based on the key. This key should be validated so that management is in a position to say that individuals with higher scores are better performing employees.
The major advantage of this method is that, because the appraiser does not know the right answers, it reduces bias and distortion. On the negative side, appraisers tend to dislike this method; many dislike being forced to make distinctions between similar-sounding statements. Raters may also get frustrated with a system in which they do not know what represents a good or bad answer; hence they may try to second-guess the scoring key in order to get the formal appraisal to align with their intuitive appraisal.
The third approach to appraisal makes use of objectives. Employees are evaluated on how well they accomplish a specific set of objectives that have been determined to be critical in the successful completion of their job. Management by objective (MBO) is a process that converts organizational objectives into individual objectives. It mainly consists of four steps
- Goal-setting – In goal setting, the organization’s overall objectives are used as guidelines from which departmental and individual objectives are set. At the individual level, the manager and subordinates jointly identify those goals that are critical in the fulfillment of the requirements of the job as determined by job analysis. These goals are agreed upon and then become the standards by which the employee’s results will be evaluated.
- Action planning – In action planning, the means are determined for achieving the ends established in goal setting; that is, realistic plans are developed to attain the objectives. This step includes identifying the activities necessary to accomplish the objectives, establishing the critical relationships between these activities, estimating the time requirements for each activity, and determining the resources required to complete each activity
- Self-control – Self-control refers to the systematic monitoring and measuring of performance; ideally, by having the individual review his or her own performance. The MBO philosophy is built on the assumption that individuals can be responsible, can exercise self-direction, and do not require external controls and threats of punishment to motivate them to work towards their objectives.
- Periodic reviews – With periodic progress reviews, corrective action is initiated when behavior deviates from the standards established in the goal setting phase. Again, consistent with the MBO philosophy, these manager-subordinate reviews are conducted in a constructive rather than a punitive manner. Reviews are not meant to degrade the individual but to aid in future performance. It is important to be that the objectives are tangible, verifiable, and measurable.
MBO’s advantages lie in the result-oriented emphasis. It assists the planning and control functions and provides motivation, as well as being an approach to performance appraisal, because employees know exactly what is expected of them and how they will be evaluated, and that their evaluation will be based on their success in achieving their objectives. Additionally, the employees should have the commitment to objectives they have participated in developing than to those unilaterally set by their boss.
The major disadvantage of MBO is that it is unlikely to be effective in an environment where the management has little trust in its employees; that is, where management makes decisions autocratically and relies heavily on external controls. The amount of time needed to implement and maintain an MBO process may also cause problems. Many activities must occur to set it up, such as meetings between managers and subordinates to set and monitor objectives; these meetings take an inordinate amount of the manager’s time. Additionally, it may be difficult to measure whether the MBO activities are being carried out properly. The difficulty involved in properly appraising the managers’ efforts and performance as they carry out their MBO activities may cause it to fail.
Factors That Can Distort Appraisals
The performance appraisal process and techniques stated above present an objective system in which the evaluator is free from personal biases, prejudices, and idiosyncrasies. This is defended on the basis that objectivity minimizes the potential capricious and dysfunctional behavior of the evaluator, which may be detrimental to the achievement of the organizational goals. Thus, our goal should be to utilize direct performance criteria when possible.
A completely error-free performance appraisal is only an ideal we can aim for, with all actual appraisals falling short of this ideal. However, we can isolate a number of factors that significantly impede objective evaluation.
- Leniency error – This error is a means by which performance appraisal can be distorted by evaluating employees against one’s own value system. When evaluators are positively lenient in their appraisal, an individual’s performance becomes overstated; that is, rated higher than it actually should. Similarly, a negative leniency error understates performance, giving an individual a lower appraisal.
- Halo error – This is the tendency to let our assessment of an individual on one trait influence our evaluation of that person on other specific traits. One method frequently used to deal with halo error is “reverse wording” the evaluation questions so that a favorable response from the employee is rated differently in different questions. Structuring the questions in this manner seeks top reduce the halo error by requiring the evaluator to consider each question independently. Another method, which can be used where there is more than one person to be evaluate4d, is to have the evaluator appraise all rates on each dimension before going on to the next dimension.
- Similarity error – this refers to the evaluation of employees based on the way an evaluator perceives himself or herself. Based on the perception that evaluators have on themselves, they project these perception onto others. For example, an evaluator who perceives himself as aggressive may evaluate others by looking for aggressiveness. Those who demonstrate this characteristic tend to benefit, while others are penalized.
- Low appraiser motivation – If the evaluator knows that a poor appraisal can significantly hurt the employee’s future, particularly opportunities for promotion or a salary increase, the evaluator may be reluctant to give a realistic appraisal. There is evidence that it is more difficult to obtain accurate appraisals when important results depend on the result.
- Central tendency – This is the tendency of a rater to give average rating. Raters who are prone to the central tendency error are those who continually rate all employees as average.
- Inflationary pressure – This, in effect, is a specific case of low differentiation within the upper range of the rating choices. Inflationary pressures have always existed but appear to have increased as a problem over the past three decades. As equality values have grown in importance in the society, as well as fear of retribution from disgruntled employees who fail to achieve excellent appraisals, there has been a tendency for evaluation to be less rigorous and negative repercussions from the evaluation reduced by generally inflating or upgrading appraisals.
- Inappropriate substitutes for performance – It is the unusual job that the definition of performance is absolutely clears and direct measures are available for appraising the incumbent. In many jobs, it is difficult to get consensus of what is a good job, and it is even more difficult to get agreement on what criteria will determine performance. For an employee, there are certain factors that are beyond the employee’s influence, which effects his appraisal. As a result, the appraisal is frequently made by using substitutes for performance; criteria that, it is believed, closely approximate performance and act in its place. The problem is that the substitutes chosen are not always appropriate.
- Attribution theory – This is a theory of performance appraisal based on the perception of who is in control of an employee’s performance. The theory attempts to differentiate between those things that the employee controls versus those that the employee cannot control. An extension of attribution theory relates to what is called impression management. Impression management takes into account how the employee influences the relationship with his supervisor. In one study, impression management was viewed as having an effect on performance ratings. In such a case, when the employee positively impresses the supervisor, the outcome was seen as a higher performance rating.
Rewards and Compensation
The design and management of reward system presents the organization with one of its most difficult HRM tasks. Organizations reward employees because they are seeking certain kinds of behaviors in return for their rewards: competent individuals agreeing to work with a high level of performance and loyalty.
“What’s in it for me?” that is a question every person consciously or unconsciously asks before engaging in any form of behavior. People do what they do to satisfy some need. Before they do anything, therefore they look for payoff or reward.
The most obvious reward employees get from work is pay. However, rewards also include promotion, desirable work assignments, and a host of other less obvious payoffs – a smile, peer acceptance, a kind word of recognition, or even a professional massage.
There is a link between reward and motivation. Since people behave in ways that they believe are in their best interests, they constantly look for payoffs for their efforts. They expect good job performance to lead to organizational goal attainment, which in turn leads to satisfying their individual goals or needs.
Organizations, then, use rewards to motivate people. They rely on rewards to motivate job candidates to join the organization. They certainly rely on rewards to get employees to come to work and perform effectively once they are hired.
Types of Organizational Incentives
There are a number of ways to classify rewards. Three most typical dichotomies: intrinsic versus extrinsic rewards, financial versus non-financial rewards, and performance-based versus membership-based rewards. These categories are far from being mutually exclusive.
Intrinsic versus Extrinsic Rewards
Intrinsic rewards are the satisfactions one gets from the job itself. These satisfactions are self-initiated rewards, such as having pride in one’s work, having a feeling of accomplishment, or being part of a team. Job enrichment, for instance can offer intrinsic rewards to employees by making work seem more meaningful. Thus if an employee experiences feeling of achievement or personal growth from a job, such rewards are labeled as intrinsic rewards.
Extrinsic rewards, on the other hand, include money, promotions, and benefits. Their common thread is that they are external to the job and come from an outside source, mainly, management. If the employee receives salary increase or a write-up in the company magazine, such rewards are labeled as extrinsic rewards.
Financial versus Non-financial Rewards
Rewards may or may not enhance the employee’s financial well-being. If they do, they can do this directly – through wages, bonuses, profit sharing, and the like—or indirectly – through supportive benefits such as pension plans, paid vacations, paid sick leaves, and purchase discounts.
Non-financial rewards cover a smorgasbord of desirable “extras” that are potentially at the disposal of the organization. Their common link is that they do not increase the employee’s financial position. Instead of making the employee’s life better off the job, non-financial rewards emphasize making life on the job more attractive.
The old saying, “One man’s food is another man’s poison,” applies to the entire subject of rewards, but specifically to the area of non-financial rewards. What one employee views as “something I’ve always wanted,” another might find useless. Therefore, care must be taken in providing the “right” non-financial reward for each person. Yet where selection has been done properly, the benefits by way of increased performance to the organization should be significant.
Some workers are very status concerned. A planned office, a carpeted floor, a large walnut desk, or a private bathroom may be just the office furnishing that stimulates an employee toward top performance. Similarly, status oriented employees may value an impressive job title, their own business cards, their own administrative assistant, or a well-located parking space with their name clearly painted underneath the “Reserved” sign. Similarly if lunch is from noon to 1 P.M., the benefit of being able to take lunch another, more preferred, time can viewed as a reward. Having a chance to work with congenial colleagues, and achieving a desired work assignment or an assignment where the worker can operate without close supervision, are all non-financial rewards within management’s discretion and, when carefully used, can provide stimulus for improved performance.
Performance-based versus Membership-based Rewards
The rewards that the organization allocates can be said to be based on either performance criteria or membership criteria. While managers in most organizations will vigorously argue that their reward system pays off for performance, but this isn’t always the case. Few organizations actually reward employees based on performance. Without question, the dominant basis for reward allocations in organizations is membership.
Performance-based rewards are exemplified by the use of commissions, piecework pay plans, incentive systems, group bonuses, merit pay, or other forms of pay-for-performance plans. On the other hand, membership-based rewards include cost-of-living increases, benefits, and salary increases attributable to labor-market conditions, seniority or time in rank, credentials (such as a college degree or graduate diploma), or future potential (e.g., the recent MBA out of prestigious university). The key point here is that membership rewards are generally extended irrespective of an individual’s, group’s, or organization’s performance. The difference between the two is not always obvious. In practice, performance may be only a minor determent of rewards, despite academic theories holding that high motivation depends on performance-based rewards.
Job evaluation is the process whereby an organization systematically establishes its compensation program. In this process, jobs are compared in order to arrive at each job’s appropriate worth.
Employees exchange work for rewards. Probably the most important reward, and certainly the most obvious, is money. But employees do not earn the same amount of money. The reason why every employee does not earn the same amount of money can be found from the topic compensation administration.
Compensation administration is the process of managing a company’s compensation program. The goals of compensation administration are to design a cost-effective pay structure that will attract, motivate, and retain competent employees, and that also will be perceived as fair by these employees. Fairness is a term that frequently arises in the administration of an organization’s compensation program. Organizations generally seek to pay the least that they have to in order to minimize costs, so fairness means a wage or salary that is adequate for the demands and requirements of the job. Of course, fairness is a two-way street: Employees also want fair compensation. If employees perceive an imbalance in the relation of their efforts-rewards ratio to some comparative standard, they will act to correct the inequity. So the search for fairness is pursued by both employers and employees.
Job Evaluation and Pay Structure
The essence of compensation administration is job evaluation and the establishment of a pay structure.
Data generated from job analysis could be used to develop job descriptions and specifications, as well as to do job evaluations. Job analysis is the process of describing the duties of a job, authority relationships, skills required, conditions of work, and additional relevant information. By job evaluation it is meant that using the information in the job analysis to systematically determine the value of each job in relation to all jobs within the organization. In short, job evaluation seeks to rank all the jobs in the organization and place them in a hierarchy that will reflect the relative worth of each. Importantly, this is a ranking of jobs, not people. Job evaluation assumes normal performance of the job by a typical worker. So, in effect, the process ignores individual abilities or the performance of the jobholder.
The ranking that results from job evaluation is the means to an end, not an end in itself. It should be used to determine the organization’s pay structure. In practice this is not always the case. External labor market conditions, collective bargaining, and individual differences may require a compromise between the job evaluation ranking and the actual pay structure. Yet when such compromises are necessary, job evaluation can provide an objective standard from which modifications can be made.
The heart of job evaluation is the determination of what criteria will be used to arrive at the ranking. Most job-evaluation plans use responsibility, skill, effort, and working conditions as major criteria, but each of these, in turn, can be broken down into more specific terms. Skill, for example, is often measured “through the intelligence or mental requirements of the job, the knowledge required, motor or manual skills needed, and the learning that occurs.” One should not expect the criteria to be constant across jobs. Since jobs differ, it is traditional to separate jobs into separate jobs into common groups. This usually means that, for example, production, clerical, sales, professional, and managerial jobs are evaluated separately. Treating like groups similarly allows for more valid rankings within categories, but still leaves unsettled the importance of criteria between categories.
Methods of Job Evaluation
There are four basic methods of job evaluation currently in use
- Ranking Method.
- Classification Method.
- Factor Comparison Method.
- Point Method.
Ranking method requires a committee, typically composed of both management and employee representatives, to arrange jobs in a simple rank order, from highest to lowest. No attempt is made to break down the jobs by specific weighted criteria. The committee members merely compare two jobs and judge which one is more important or difficult. Then they compare another job with the first two, and so on until all the jobs have been evaluated and ranked.
The most obvious limitation to the ranking method is its sheer unmanageability when there are a large number of jobs. Other drawbacks to be considered are the subjectivity of the method – there are no definite or consistent standards by which to justify the rankings – and because jobs are only ranked in terms of order, but nothing are mentioned about the distance between the ranks.
Classification method was made popular by the U.S. Civil Service Commission, now the Office of Personal Management (OPM). The OPM requires that classification grades be established. These classifications are created by identifying some common denominator—skills, knowledge, responsibilities– with the desired goals being the creation of a number of distinct classes or grades of jobs.
Once the classifications are established, they are ranked in an overall order of importance according to the criteria chosen, and each job is placed in its appropriate classification. This latter action is generally done by comparing each position’s job description against the classification description.
The classification method shares most of the disadvantages of the ranking approach, plus the difficulty of writing classification description, judging which jobs go where, and dealing with jobs that appear to fall into more than one classification. On the plus side, the classification method has proven itself successful and viable in classifying millions of kinds and levels of jobs in the civil service.
Factor Comparison Method
Factor comparison method is a sophisticated and quantitative ranking method. The evaluators select key jobs in the organization as standards. Those jobs chosen should be well known, with established pay rates in the community, and they should consist of a representative cross-section of all jobs that are being evaluated. Typically, fifteen to fifty jobs are selected by the committee.
The factors in the key jobs that will the other jobs be compared against are usually mental requirements, skill requirements, physical requirements, responsibility, and work conditions. Once the key jobs are identified and the criteria chosen, committee members rank the key jobs on the criteria. The next step is the most interesting dimension in the factor comparison method. The committee agrees on the base rate (usually expressed on an hourly basis) for each of the key jobs and then allocates this base rate among the criteria.
The final step in factor comparison requires the committee to compare its overall judgments and resolve any discrepancies. The system is in place when the allocations to the key jobs are clear and understood, and high agreement has been achieved in committee members’ judgments about how much of each criterion every job has.
Drawbacks to factor comparison includes its complexity; its use of the same criteria to assess all jobs, when, in fact, jobs differ across and within organizations; and its dependence on the key jobs as anchor points. On the positive side, factor comparison requires a unique set of standard jobs for each organization, so it is a tailor-made approach. As such, it is automatically designed to meet the specific needs of each organization. Another advantage is that jobs are compared with other jobs to determine a relative value, and since relative job values are what job evaluation seeks, the method is logical.
Point method breaks down jobs based on various identifiable criteria (such as skill, effort, and responsibility) and then allocates points to each these criteria. Depending on the importance of each criterion to performing the job, appropriate weights are given, points are summed, and jobs with similar point totals are placed in similar pay grades.
The point method offers the greatest stability of the four approaches. Jobs may change over time, but the rating scales established under the point method stay intact. Additionally, the methodology underlying the approach contributes to a minimum of rating error. On the other hand, the point method is complex, making it costly and time-consuming to develop. The key criteria must be carefully and clearly identified, degrees of factors have to be agreed upon in terms that mean the same to all raters, the weight of each criterion has to be established and point values must be assigned t degrees. While it is expensive and time-consuming to both implement and maintain, the point method appears to be the most widely-used method.
Some Special Cases of Compensation
As traditional organizations are rapidly changing in the dynamic world, so, too, are compensation programs. Most notably, organizations can no longer continue to increase wage rates by a certain percentage each year (a cost-of-living raise), without some comparable increase in performance. Accordingly, more organizations are moving to varied themes of [ay-for-performance systems. These may include incentive compensation plan, and competency and team-based compensation.
In addition to the basic wage structure, organizations that are sincerely committed to developing a compensation system that is designed around performance will want to consider the use of incentive pay. Typically given in addition to—rather than in place of—the basic wage, incentive plans should be viewed as an additional dimension to the wage structure. Incentives can be paid based on individual, group, or organization-wide performance—a pay-for-performance concept.
Each of the individual incentives also can be used on a group basis; that is, two or more employees can be paid for their combined performance. Group incentives make the most sense where employees’ tasks are independent and thus require cooperation.
The goal of plant-wide incentives is to direct the efforts of all employees toward achieving overall organizational effectiveness. This type of incentive produces rewards for all employees based on organization-wide cost reduction or profit sharing.
In today’s changing organizations, much more emphasis has been placed on involving employees in most-aspects of the job that affect them. When organizations group employees into teams and empower them to meet their goals, teams reap the benefits of their productive effort. That is, team-based rewards are tied to team-based performance. And that translates directly in to their compensation.
Under a team-based compensation plan, team members who have worked on achieving, and in many cases, exceeding established goals, often share equally in rewards (although, in the truest sense, teams allocate their rewards). By providing for fair treatment of each team member, group cohesiveness is encouraged. There must be mutual trust among the team members. They must respect one another, effectively communicate with one another, and treat each member fairly and equitably.
Grameen Phone: Background
Bangladesh has one of the lowest telephone penetration rates in the world. The number of telephones–both mobile and fixed–per 1000 people is only 3. The country’s fixed line telephone network in the public sector is totally inadequate. There are only about 450000 fixed -line telephones in the country of 125 million inhabitants. Almost 80% of the populations, who live in the rural areas, have virtually no telephones. The Bangladesh Telegraph and Telephone Board (BTTB) provide 82% of the total connections and the remaining 18% is divided among the mobile operators.
CityCell Mobile Phone Service introduced the concept of mobile telephone in Bangladesh in the early 90s. The Ministry of Posts and Telecommunications of Bangladesh granted the nationwide digital cellular license to Grameen Phone on 28th November 1996 and it thus came into the picture.
Launching of Grameen Phone
Grameen Phone (GP) launched its services in Bangladesh on 26th March 1997. The basic strategy of GP is the coverage of both urban and rural areas. GP believes in service that leads to good business and good development. Its purpose is to receive an economic return on its investments and to contribute to the economic development of Bangladesh.
Telenor, a state-owned telecommunication company in Norway, is the largest shareholder and owns 51% of GP. The Grameen Bank is the second major shareholder and owns 35%. Marubeni Corporation of Japan holds 9.5% and Gonofone Development Corporation in New York holds 4.5% of GP.
Infrastructure Development & Network Expansion
GP made several important steps in its infrastructure development and network expansion. It took lease of 1800-kilometer fiber optic backbone network from Bangladesh Railway for 20 years in September 1997. The GP network now has coverage in some 39 districts including all six divisional headquarters. Some major transmission networks were completed in 2000 including Dhaka-Rajbari, Sylhet-Mymensingh and Narayanganj-Laksam links.
Market share of GP in the mobile industry of Bangladesh
Grameen Phone is the largest private sector investment in the country with over USD 130 million already invested. It is the leading mobile phone operator in the country in terms of both coverage and number of subscribers, commanding more than 70% of the market share. The fast expansion and coverage area of the GP network and the aggressive marketing of existing and new products greatly contributed to increase the number of subscribers.
An Overview of Sales Growth over the Years
Grameen Phone ended its inaugural year with some 18,000 subscribers. The number of subscribers increased from 30,000 to over 60,000 in 1999. It doubled its subscriber base every year since launching its service in 1997. And this year the subscriber base was tripled to 193,588. Grameen Phone had over 360,000 subscribers as of June 2001.
Grameen Phone made its first net profit of USD 3.7 million during the year ending in December 2000. The operating revenue of Grameen Phone also doubled during every year of its operation.
Nevertheless, Grameen Phone faces some constraints in its expansion such as limited coverage due to inadequate investments funds, government license obligations to cover the major cities first, limited access to public fixed networks and regulatory constraints involving the process of sub-leasing the transmission capacity.
HRM Department: Background
GP as any other successful organization has an established HRM department. The function of this department is to provide as much support as possible to the other departments of GP. They have realized the fact that in order to be successful the organization needs a department that will deal with all the matters involving human resources of the organization.
The HR department was established in 1997. The total number of employees working in the HR department at the moment is 10.
The HR department of GP consists of four separate sections. These are:
n Recruitment and selection
n HR management
n Training and development division
n HSE (Health Safety Environment) division
The recruitment and selection department of GP deals with all the recruiting and selecting matters of the organization. This division carries out all the functions in meeting the demand for employees when the organization needs to recruit them.
The HR management division of the Human Resource Department is responsible for supporting the process of HRM. This division is maintaining all the functions that needs to support the proper functioning of the HR department so that they can support the organization in carrying out the function.
The training and development division of the HR department is responsible for assessing the training needs of the employees of the organization. According to the need, they suggest the appropriate training method and thus suggest to the HR director. As a result the development needs of the employees are ensured.
The Health Safety Environment division better known as the HSE division is responsible for providing safety and better working condition for the employees. This division is responsible for ensuring that the health and safety standards set about by the government is enforced by the organization.
The organogram of GP is as follows. There is a director of HR department who undertakes all the functions of this department. There are deputy managers in every division of the department. These managers are aptly supported by an officer.
To give an idea as to the need for the existence as well as the importance of the HRM department in GP we can but look at some interesting statistics. In the 2000-2001 fiscal yearn they had a phenomenal growth of around 200%. This growth had to be supported by a growing workforce. Thus the HRM department has carried out their activities in full force. In the year 2001 they recruited around 200 employees. In the year 2002 they recruited around 170 employees. In the coming year of 2003 they plan to hire or employ around 170 more employees to meet the demand of the growing organization.
Background of Aftab Bahumukhi Farm Limited (ABFL)
Bangladesh is a country with abundance of labor force awaiting opportunities for gainful employment. Actually, these people o either sex constitute a bank of huge human resource. By utilizing these resources in a benefiting and dignified manner, significant changes can be brought about in the economy of Bangladesh. Bangladesh economy is overwhelmingly rural and agro-based. If such avenues of opportunities of income generating activities for the unemployed could be targeted at rural Bangladesh, a multidimensional market force would turn in to a causative factor towards alleviation of poverty at the grass root level.
Private sector investment in rural based agro-economies is insignificant. Established business houses are yet to divert their attention in such nontraditional propositions. However, towards 1991, the Islam Group from its initial interest in poultry development sector, formed Aftab Bahumukhi Farm Limited (ABFL), and subsequently became active as a multidimensional conglomerate. ABFL is located at Bhagalpur, an emerging picturesque village under the Bajitpur Police Station in the District of Kishorganj also a suitable locality for ideal farming. It is the birthplace of late AL Haj Jahurul Islam, the founder chairman of Islam Group, and the philanthropist and industrialist of repute. There are many educational and charitable institutions in Bhagalpur established and running under the patronage of Islam Group. As a result, the village has been emerging as a ever growing town. ABFL was established with the dual purpose of providing permanent financial backup to the educational institutions, the Jahurul Islam medical college and hospital in particular and financial succor to the poor people of the locality creating job opportunities and self employment in general. The entire profit of ABFL is being utilized in financing the educational and charitable institutions.
Operations of ABFL
Its activities according to field of operations are:
- Feed mill
Under the poultry operations, they carry out the following activities:
- Parent stock – ABFL maintains about 60000 broiler and parent stock in modern environment control houses.
- Production of day-old chicks – More than 100000 broiler and layer chicks are produced in the modern hatchery with a capacity of 400000.
- Commercial layer – ABFL is maintaining a stock of 10000 commercial layers which are producing 60000 brown eggs per week.
- Poultry processing plant – A modern poultry processing plant is established with a capacity to process 1000 birds per hour. The processing plant has automatic overhead conveyer, four stage scalder, plucker, spray nozzle and automatic disinfectant system.
- Layer and broiler farming
- Breeder farming
They also provide some peripheral services such as:
- indemnity safety and security
- loan management
Under this operation, they provide poultry feed and cattle and fish feed. The poultry feed mill is an operation with the capacity of 2.5 tons per hour pelleted poultry feed. To meet increased demand, ABFL had to run the mill for 20 hours a day producing 1300 tons feed per month. They have also chalked out an extension program to produce total 5000 tons. The cattle and fish feed program is on a trial basis.
ABFL has installed a modern automatic milk processing plant to process and pack with a capacity of 1000 liters of pasteurized milk per hour. ABFL has also open six raw milk collection centers. Based on the program of dairy contract farming, there are on an average of 20000 milking cows with an average yield of 5 liter per cow per day. They are also providing indemnity security and safety programs.
The fishery sector is in the initial stage of development. The present capacity is as follows:
- there are 34 ponds
- the total water area is 20 acres
- the present capacity is 50 tons per month
- the types of fishes are catfish, carp, shrimp, and pungush
ABFL is utilizing the highly fertile low land and flood free high land for year round cropping. They have laid stress on nontraditional high price-fetching vegetable productions and seed productions of soybean, potato, and maize. Around 600 tons of potato seeds are produced per year.
ABFL employs on an average of 5-6 employees per year.
Grameen Phone, an HRM Insight
Grameen phone uses on- line application system for its recruitment purposes. Grameen phone prefers its internal employees to assume newer responsibilities, and the information of any new job opening is communicated though local area network (LAN). Once Grameen is certain that internal employees are not fitting in the new jobs, on-line advertisement is used to recruit employees from outside the organization. This on-line advertising system not only increased the accessibility of the applicants throughout the world to apply for Grameen phone, but also resulted in an increase in speed and reduction in cost of advertising. It should be stated that Grameen Phone succeeded in reducing its cost by 75% by using on-line advertising. Currently they have 18000 CVs in their database.
Goals of Recruiting of GP
Because of a well organized HR department GP has been able to create an effective communication network between the different departments. As a result any need for recruitment is communicated by the respective department through the HR to the top-level management which then proceeds to meet the demand of the particular department.
The job information is then communicated HR department to the potential job applicants. The ultimate goal of GP is to recruit the best possible candidates by creating an efficient line of network among the departments.
Factors/constraints Affecting Recruiting Efforts of GP
The major constraints of Grameen Phone’s recruiting process have been identified as:
Since its inception the recruiting cost of GP had been high due to costly advertising campaigns in the printed media. Recently they have started online application system as mentioned earlier and as a result they have substantially reduced this cost by 75 percent. .
Internal Organization Policy
Being a growing company recruitment rate of Grameen Phone is very high; in year 2002 GP recruited about 170 employees. In spite of that GP places more emphasis on internal recruiting than the external ones. This has become one of their core internal organizational policies.
Attractiveness of the Job
When GP first started its operation in October, 1996 Grameen Phone had to compete in the job market with the multinational & renowned companies. But being successful in the telecommunication sector and capturing a lion share of the market Grameen phone has now earned a reputation of providing attractive jobs which are at par with the corporations. What had been their constraint few years back has now become a positive factor in their recruiting efforts.
As stated earlier Grameen Phone goes for internal sources of recruitment. In this process they go for
- Job Postings on bulletin boards.
- E-Mailing to all the employees informing them about the job opening including the job description.
- Job vacancies are published in the “Career Opportunity” section of Grameen phone’s website which can only be accessed by GP employees.
- Most of the jobs are open for both external as well as internal applicants. However there are some specific jobs which are only accessible to the internal employees only.
In this process they go for recruiting using:
- Online application process
- University placements
- Job fairs
- Consultants- for senior level recruiting
Unlike the first few years, where Grameen Phone opted for advertising its recruiting needs using the printed media, now it has shifted its advertising campaign by using the internet. They now recruit using the online application form, were they have had numerous responses. They currently have 18,000 CVs in their database.
Grameen phone goes for university placement by sending letters and other forms to notable institutes such as IBA, NSU and also in other vocational and technical institutes. In these letters they specifically mention the job requirements, specifications as well as the description. After receiving the responses they start processing the recruitment process.
Job fairs have achieved popular status since they started few years back. Grameen Phone has been using these job fairs as their recruiting sources. Last year they employed over 40 personals from these job fairs.
For senior management level recruitment, Grameen Phone goes for using the services of management consultancies or “head hunters” organizations. In addition to all these recruitment sources, they also go for unsolicited applicants or walk-ins as they are better known.
In addition to permanent employees, Grameen phone goes for temporary employees. These employees are recruited on a contractual basis for a specified period of time. These employees are recruited mainly for various short term projects and carrying out surveys. These tasks do not constitute long time span. These recruitees are mainly students, recent graduates or interns.
Permanent workers re not used in these projects and surveys because according to Grameen it is wastage of resource in terms of both capital and labor. As these jobs are temporary, GP does not require them to fit in the organizational setting and culture. The advantages of using these forms of recruitment are:
- GP has numerous projects and as a result they need to hire such employees.
- These employees are cost effective.
Last year GP employed 130 such types of employees.
The recruitment process starts from the matching of the demand for employees of the separate departments of GP. As it is growing industry in its own sector, GP has demands for numerous employees. To match this demand they require an efficient recruiting process whereby they can meet this demand. This is where the HRM department comes to play.
The process starts when the concerned departments send a proposal about the required number of employees to the HRM departments. The hr department then consults with the Finance department to find out the maximum number of employees that can be employed under the allocated budget for recruiting. After the determination of the maximum number of allotments that can be recruited after the consultation with the finance department and top level management, the prescribed number is then sent to the concerned department informally. If there is an oral agreement between them, then the HR department processes the prerequisite requisition form and sends to the departments, top level management and the finance department.
After the requisition form is filled out and it is transmitted to the concerned departments, it is then up to the concerned department to determine whether they accept this number or not. Once the requisition form is accepted by the concerned department, they then supply the HR department with the job specification and requirement and thus the Hr department starts with the recruiting process.
The selection process of GP is a more or less traditional approach. The selection process of Grameen Phone typically consists of the following steps.
- Summary sheet
- Short listing(by the human resource department)
- Comments to the concerned departments about the applicants
- Written test(up to deputy manager level)
The selection process starts with an initial screening using a summary sheet. This summary sheet summarizes the characteristics of the applicants in light of their educational background and experience. By reviewing the summary sheet, a short listing of the applicants is done to reduce the number of applicants to a short list of potential jobholders. The results of this short listing are then communicated to the concerned departments. A written test is then conducted as final evaluation of the applicants. Only a negligible percentage of recruitment is done for higher level managers, and it is only for them that an interview session is conducted instead of the written test. Interviews are also carried out for entry level employees and especially for those who are selected by the company to be posted outside Dhaka. Applicant assessments are not performed yet being only a new company in the market, but the HR department of GP is planning to introduce an assessment center for the applicants. According to the HR department of GP, some loopholes are formed in their more or less traditional approach towards selection, and the establishment of an assessment center is very important for successful selection of personnel in their organization.
Hiring is the most important decision made by the managers of professional activities, firing and disciplining are the most painful, but performance evaluation may be the most difficult. Performance evaluation exemplifies one of the persistent characteristics of the management of the professionals; it has to be done, and there is no neat, objective way to go about it.
GP uses its own appraisal system in evaluating the performance of their employees. They use a prescribed format for each of their eight management competencies. These eight competencies are identified by the GP management to be essential for successful evaluation of their employees. Usually they set the objectives for each department at the beginning of each year and communicate it to the department heads, who in turn communicate these to their subordinates.
In GP, performance appraisal of an employee is done by the supervisor of the concerned department. Other appraisal systems such as peer evaluation, 360 degree evaluation, etc. are not done in GP. According to GP, evaluation by supervisor is much preferred than peer evaluation and subordinate evaluation as the latter results in peer pressure and influences of supervisors while appraising.
The performance appraisal system of GP consists of a written scale of job-related parameters. Each of the eight competencies of the employees is graded on a scale of 0-5, and the particular employee is rated on a total scale of 40. It must be noted that the routine functions of GP are not included in the appraisal process; a somewhat critical incident method is used to appraise employees. So we can understand that the management of GP is highly concerned with the unbelievably good or undesirably bad results of an employee in appraising the particular employee.
Barriers of Appraisal Method
Performance evaluation is one of the most difficult processes in the organization, and so a number of difficulties are associated with its application. In GP, they face a number of problems regarding performance appraisal such as
- Difficulty in meeting deadline – a major difficulty in appraising employees is the inability of the appraiser to meet the deadline set by the company to appraise the employees. Performance appraisal is a very time consuming effort, and, still in their early days, GP has not yet produced a faster way to appraise employees.
- No particularly appropriate method – there are several methods by which appraisal can be conducted, bur they were unable to use standard appraisal systems such as BARS, paired comparison, etc. because they were not consistent with the appraisal needs of the organization. So they had to set up their own performance appraisal system which is consistent with their company.
Sometimes motivation is considered as a yardstick to measure performance of an employee. It is often taken for granted that the more motivated an employee is, the more successful he is in his daily activities. However, it should be understood that motivation is only an important part in determining the employee’s success in performing, not the only factor behind successful performance.
In GP, the management carries out surveys regarding employee satisfaction to get an idea about employee motivation towards the job. Each year, the company delegates to the employees the expectations they keep to the employees in terms of their performance. The HR department also has conducted surveys as well to find out whether they have supported the business or not. This is done to see whether they are participating in the growth of GP. This way they can ensure effective motivation to be associated with the success of the company.
An important motivation method that they have employed is to create an image as a renowned employer in the job market. This image helps GP in creating a congenial environment for the employees as well as creating an indoctrinating effect for the company. This guaranties maximum effort on the part of the employee followed by high job satisfaction.
As an important motivation technique, GP tries to first create and then incorporate positive values within the organization. These values, they believe, will guide the behavior of their employees, and thus enabling them to evaluate the performance of the employees successfully. While creating these core values, GP consults with every employee to determine the values that will be instrumental in making GP successful. As a result, the employees of GP feel to be part of the organization which acts as a very effective motivation tool.
GP does not have any specific uniform motivational tool. Rather they try to motivate employees on the following bases
- Right values – GP tends to motivate employees who follow the core values of the organization by both financial and non-financial rewards.
- Long service rewards – This differs in every department, but the main theme is that the employees are rewarded as well as awarded for their long services.
- Permanency – For entry-level employees, a successful motivational tool has been awarding them a permanent position after six months.
- Employee competition – Employees are handed down with challenging goals which provides them with intrinsic rewards.
- Flexible Benefits – Flexible benefits are dependant on a particular situation and the appropriateness of the reward.
Training and Development
GP has found out that training is an important motivational tool, and so thy have decided to provide training and development of employees. The types of training they provide are
- Situational leadership training o find out the potential future managers of the organization
- Customer service to deal with the customers
- Leadership training only for senior level personnel
Also they provide workshops for developing
- Non-technical managers
- Post confirmation business orientation where they share the employees’ feelings about the organization after joining it.
Motivating High Tech and Low Tech Employees
As a GSM company, GP has a high capital structure. Due to dealing with technical issues, they require a technical division which carries out the various planning and controlling activities to deal with the technological aspects of GP. HR department has recognized the fact that this department deals with high tech employees. As a result the motivational tools are a bit different from those mentioned earlier as they are low tech employees.
These high tech employees have to be available 24 hours or on call announces. Thus these employees undergo high stress and pressure. The motivational techniques used are to:
- Pay these employees on an overtime basis
- Provide them with high tech training
A surprising thing that was discovered in GP is that they do not go for job rotation in their work place. This may seem surprising since most companies go for such type of techniques as their motivational methods.
Rewards and Compensation
It is very important for an organization to pay its employees. In order to motivate its employees, an organization has to pay for the performances of the employees. In order to be successful this function of the organization has to be linked with the motivational as well as the appraisal system.
From Gp’s point of view they prefer to pay extrinsic rewards. These rewards are in the form of uniform benefits. They do not go for flexible compensation. These extrinsic rewards are in the form of basic salary and when the performance of the employee is satisfactory then bonuses are given.
Intrinsic rewards are given in the form of involving the employees in forming the core values in the organization as stated earlier. Also goal setting of the job is done with the participation of the employees which creates an atmosphere of cooperation and belongingness. Furthermore the top level management sets challenging goals for the departments and as result they provide the employees with an opportunity to prove themselves.
GP does not go for non financial rewards in the form of choosing ones own office furnishings, preferred lunch hours and so on. Rather the organization prefers to pay financial rewards in the form of normal payment of salary and so on.
Performance based rewards are given in the form of:
- Commissions- these are only applicable to dealers of GP who meet the target sales amount at the end of a year, month and so on. Also these payments are made on the basis of the number of mobile phones sold.
- Performance bonuses- These payments are paid to the employee who performed well in achieving the organizational goals.
- Merit pay plans in the form of benefits such as pensions, insurance and so on.
GP provides membership based rewards only after the employee has worked in the organization for 6 months. These rewards are in the form of benefits for security and participation in the organization.
GP has no separate compensation administration in its organizational structure. Rather the HR director coordinates and plans the reward system in consultation with the directors of the other departments.
The jobs are evaluated based on the objectivity of their functions. Then the employee’s performance is evaluated in the appraisal function of the HR department. Job evaluation is done using
- Ranking method
- Point method
After the evaluation is done, then the HR department goes for reviewing the performance of the employees.
GP has to determine the pay structure for the employees. This is done in congruence with inflation and other economic factors. In determining the pay structure GP used a survey three years back. This does not mean that GP will not use such methods in the future.
Special Cases of Compensation
GP does not provide individual incentives such as merit pay, piecework etc. Rather they go for general incentives in the form of normal pay and other bonuses. It should be mentioned that the departments of GP give non financial rewards such as “best sales officer award” and so on. These awards are a means of motivating the employee.
Competency based awards are given in GP. These awards are very minimal in comparison to other types of compensation. These rewards constitute only 5% of the total reward system. As a result the HR department does not consider this as a formal compensation method. They further do not recognize them as part of a competency based award.
Aftab Bahumukhi Farm limited: Dealing with HRM
Aftab Bahumukhi undergoes a simple recruiting method. First of all the top level management decides on the number of people they need. Then they decide the type of people they need based on the needs of the organization. As a recruiting tool, they use printed media for recruiting technical people in the organization.
As the organization is established in the outskirts of Dhaka, it has to be specific as to the job requirements. That is why, when they advertise using the printed media, they specifically provide job requirements, specification and so on. The reason is that they believe openness about the job will be beneficial for the employee as well as the organization. That is why they do not go for “Blind Box” advertising. They specify every detail in the advertisements so that the potential employee knows what the job is composed of.
They also go for employee referrals in recruiting. According to the management, they prefer Aftab as a whole to be a family friendly organization. That is why they want to hire such people who will fit in the organization fitting very comfortably. Thus employee referrals on potential candidates are widely accepted on the part of management as a recruiting policy.
A major method of recruiting on the part of ABFL is to accept “walk-ins”. They accept the applications from potential candidates who just drop in their CVs. This is a cheap method of recruiting as no cost is involved.
Also they prefer to approach the potential candidates for top and middle level management. According to their philosophy they want to attract the best possible candidates for their top level positions. That is why to attract them they provide them with offers directly instead of asking them to come to them with the job opportunities.
Goals of Recruiting
The goal of ABFL is to make sure they communicate the needs of the organization to all the potential candidates. This is done to ensure that there is no confusion about the job requirements as well as the job specifications required about the candidate on his job.
Factors/Constraints on the recruiting efforts of ABFL
As a successful organization ABFL has to face a lot of criterions in recruiting the best possible candidates for the best possible jobs. The factors that affect the recruiting efforts of ABFL are as follows:
n Focus on academic background
According to ABFL the main focus on their recruitment procedures is to focus on the academic background of the potential candidates. Since the tasks of ABFL main functions are technical in nature, it is a prerequisite that the candidates are educated up to the level as required by the nature of the job. But it is also a fact that they do not focus on the academic brilliance of the employees. To them it is important to have academic proficiency but not to be brilliant.
One of the major factors that affect their recruiting policies is age. According to the management of ABFL, the company’s philosophy is to have employees who will serve in the organization for their lifetime. As a result the minimum age required by the organization is to have employees above the age of 30. The reason behind this is that once they have reached this age they do not qualify to hold any government posts, since the minimum age of giving the BCS examination is 30. This does not mean that they do not hire any individual below 30. The situation of the recruitment determines the age requirement.
ABFL’s jobs require most of the employees to be located at Bhagolpur, the site of ABFL. Thus it is a factor of recruiting for ABFL that the employees do not have establishment in Dhaka. The reason behind this is that if they have establishments in Dhaka, then they will have ties in the sentimental way and as a result they would not be able to concentrate in their jobs. Thus they prefer employees not to have establishments in Dhaka.
Also as a major growing industry in their own field, they do also face certain constraints in their recruitment process. These are:
n Influence by external parties
n Difficulty in matching criterions
As a local corporation operating in a developing country, it is very difficult to carry out its recruitment functions without any external influence. This may be beneficial sometimes for the organization. But in most cases this may be detrimental for the organization as they might not be able to have the best possible candidates for the jobs as they are not able to choose by an evaluation method, but rather on an informational basis.
The jobs of ABFL are very technical in nature. Also the top level management has lots of criterions for the jobs. As a result sometimes the potential candidates do not match these criterions all the time. Thus it is very difficult for them to recruit the best possible candidates all the time.
As any other organization, ABFL has to seek sources for recruiting. These sources are as follows:
The internal sources for recruiting in the organization are as follows:
n Job rotation inter department wise
ABFL’s main theme is to create a family friendly organization. Their main philosophy is to form an organization that will have a family type environment. As a result they prefer to recruit employees from inside of the organization. This way they believe they can form an environment that will help them in their philosophy. Employees are rotated among the sister concerns of ABFL for the sake of job diversification.
In this process they go for recruiting using:
n Advertisements in the printing media.
ABFL uses advertising as one of the main external recruiting sources. They opt for advertising in printing media. The reason behind this is that this method is cost effective and it provides mass circulation. Among their advertising policies one is not use “blind box” advertising. For technical purposes and the nature of the job they prefer to specify every detail entailing the job.
One of the most important external sources is to use walk-ins. They accept huge number of application from potential unsolicited applicants. But on the other hand they do not maintain any database for recording and storing of these applications. These walk-ins are employed on a need for basis.
They do not employ any head hunter agencies for recruiting any top level or middle level managers rather they approach them directly. Their main focus in recruiting these managers is to make sure that they have been stable in their career and their experiences are the key factors.
They do not go for other external recruiting sources such as, university placement, job fairs, recruiting agencies.
ABFL management analyzes the objectives of the organization as a result determines the necessary recruitment needed to meet these objectives. If there is a need for recruiting it could be through promoting or hiring, the management determines the number of employees needed. Thus the recruitment process is initialized. They also keep in mind abo0ut succession planning and thus determine the sources for filling up a vacant position.
The supervisors can also consult with the top level management to determine the number of recruitments needed to successfully achieve the goals of the organization.
Once the required number of recruitment is determined the selection process is initiated. At first the organization advertises as mentioned before in printed medium, unsolicited walk-ins, or from internal sources. Next they analyze these applications and then call the candidates for interview. In the interview process assessments are made on academic background, age, establishment, and experience (for mid-level and top-level management). Then the selection process is completed and the successful candidates are hired by the organization.
In the selection process ABFL does not go for written tests, assessment centers and medical or physical tests.
Hiring is the most important decision made by the managers of professional activities, firing and disciplining are the most painful, but performance evaluation may be the most difficult. Performance evaluation exemplifies one of the persistent characteristics of the management of the professionals; it has to be done, and there is no neat, objective way to go about it.
ABFL’s appraisal process is done on a continuous basis. The employees are evaluated on a need for basis. This is why the management prefers to evaluate employees on an ongoing process. There is no specified time barrier to complete the appraisal process.
The objective of the management is to make sure that the important employees are retained in the organization. This is why they appraise on a continuous basis and as result helps in improving the quality of the employee’s performance.
The appraisal is carried out by supervisors who are directly above as well as in contact with the employees in question. These appraisals are mostly in the general format and sometimes a rating scale is used which is designed by the top-level managers. The criteria for evaluating are provided by the top-level management and they consult with the supervisor in carrying out the appraisal.
ABFL prefers to use the oral method to appraise the employees. Once in a while they ask the concerned supervisor to appraise an employee. Since there is no time barrier, the concerned supervisor can present after he has finished the appraisal at any time. The presentation is made in the oral format to the top-level management in an interview basis. The questions of the top-level management are answered by the concerned supervisor. And thus the appraisal process is completed.
They also use a rating scale in appraising the employees. The criteria and ratings are defined by the top-level management and then these are presented to the concerned supervisor and then the appraisal is done.
Group-level appraisal is also done in ABFL. ABFL sets goals for every group (poultry, fisheries, hatchery, etc) and set the effort needed by the groups to achieve the goals. Then the appraisal is done on the basis of the effort given to achieve the goals.
Another successful appraisal method is to use counseling amongst the employees. Here the employees are counseled on the basis of their performance. Those who have performed poorly are appraised by counseling with the employee in question. Here the cause of the performance is determined and accordingly they are advised upon to improve their performance.
Barriers of Appraisal Method
As any other organization in a developing country, ABFL faces many barriers to appraisal process. These are mainly in the form of
- Biasness- the supervisors may be biased in their appraisal of the employee in a positive or negative manner. This may not be beneficial for the organization’s performance.
- External influences. Sometimes the appraisal process is influenced by external parties who are very important to the organization achieving its goals. But this influence may be detrimental for the organization’s activities.
- Central tendencies. Sometimes the supervisor who is asked to carry out the appraisal may evaluate all the employees in the same manner. This will lead to an accumulation of all the performances in the same manner and thus won’t reflect any exceptions
Sometimes motivation is considered as a yardstick to measure performance of an employee. It is often taken for granted that the more motivated an employee is, the more successful he is in his daily activities. However, it should be understood that motivation is only an important part in determining the employee’s success in performing, not the only factor behind successful performance.
ABFL has a simplified motivation process working in the organization. They believe in forming a family friendly organization and also they try to form a family like environment in the organization. Their philosophy is
- To provide life-time employment.
- Instill a philosophy of if the company does well, the employees are doing well.
The philosophy of life-time employment provides a sense of security to the employees. This is a very good and effective motivational tool. The company doing well means the employee doing well philosophy provides a boost for the employees to perform.
Reducing tension and stress
The main instruments in reducing tension and stress are
- Job rotation
- Recreational activities
- Family friendly environment.
Training and Development
For training and development purposes the employees of ABFL are sent abroad on the basis of their job evaluation. As mentioned before they are sent by the parent company to various countries to enhance their skills.
No workshops are provided by ABFL management to the employees.
ABFL prefers to rotate jobs among its sister concerns. According to ABFL their job rotation policy is an important instrument to improve their employees’ motivation, skills, diversification, and their overall quality.
Reward and Compensation
It is very important for an organization to pay its employees. In order to motivate its employees, an organization has to pay for the performances of the employees. In order to be successful this function of the organization has to be linked with the motivational as well as the appraisal system.
Since ABFL has no separate HRM department, there is no separate compensation administration. The rewards are det4ermined by the top-level management and are paid by them.
Here the jobs are evaluated on an oral basis. The supervisors are consulted by the top-level management and they evaluate the job based on an oral report by the supervisor. There is no fixed time period or span for evaluating these jobs rather they are evaluated on a two to three year basis and accordingly the employees are promoted.
The major barriers in evaluating a job from ABFL management’s point view are as follows,
- Biasness from the point of evaluation by supervisors since there is no controlling method.
- Influence by external parties in evaluating an employee positively or negatively.
ABFL does not carry out any external surveys to determine its pay scale; rather they carry out surveys in their sister concerns to determine the pay scale. The management of ABFL strongly believes in providing a wage acceptable to the market condition. They truly believe in providing facilities more than any other companies in the country. They strive for modernization and help the employees to obtain modern equipment to make their life easier.
Comparative Study between Aftab and GP
There are some basic differences between Aftab and GP. First of all, GP has realized that since it is a growing company, they need to deal with employees in a proper manner. As a result, GP has a separate department to deal with human resource of a company. On the other hand, ABFL also a growing company in its own rights still follows a traditional approach in dealing with the human resource. As a result, they do not have a separate department, rather they allow the top level management to decide the human resource decisions and dealing with them.
- Advertising media used in the two companies are different; GP uses online advertisement which has resulted greatly in cost reduction; ABFL, on the other hand, uses printed media for their advertisement.
- GP prefers internal employees to be recruited in newly formed vacancies; only when internal employees are not available, they go for external sources. ABFL, on the other hand, being a more established company, recruits fewer employees than GP, and they employed mostly external applicants.
- ABFL approaches to recruit middle and top level managers. On the other hand, GP goes for head-hunters to recruit top level managers.
Constraints that Effect Recruiting in Companies
In GP, the main factors that affect recruiting are recruiting costs, internal organizational policies of preferring recruitment of internal employees rather than external employees, and attractiveness of the job. In ABFL, these factors do not seem to pose any problem. Here, the main factors influencing the recruitment process are the focus on the academic background of the employee, age of the employee, and establishment of the employees of whether they have any settlements in Dhaka city. In ABFL, the management also faces some constraints regarding the influences by external parties and difficulty in matching criterions.
- GP prefers to recruit employees from within the organization. In ABFL, this is not the case. The main theme of ABFL is to create a family friendly organization. Thus, referrals are a major portion among the employees recruited.
- GP prefers to recruit internally because of various reasons such as cost reduction, higher degree of communication among the employees, etc. however; GP does not go for job rotation. This is because, as GP is a vast organization, employees are recruited to work in specified fields, and thus rotation is virtually impossible
- The rate of recruitment in GP is very high; last year the company recruited about 170 employees. On the other hand, recruitment rate in ABFL is very low; the company recruits 4 to 5 employees annually.
- Although they prefer internal sources for recruitment, GP also makes use of external sources such as advertisement using online application, university placements, job fair, walk-ins and consultants (for senior level managers). ABFL also utilizes advertisements, but that in printed media. Unlike GP, ABFL does not go for university placements, job fair or consultants.
- The work pattern of GP calls for some temporary jobs such as projects or surveys, which would be terminated after some period of time. Thus GP prefers to have young employees, especially students, interns and new graduates for these posts. In ABFL, however, the management prefers to have employees over thirty years of age. The reason behind it is that after thirty years of age individuals cannot appear for B.C.S Exam, and thus these employees are less probable to quit jobs.
GP’s recruitment process is more extensive than ABFL. GP’s recruitment involves participation of all the departments. ABFL’s recruitment process is much more simplified since there is no separate HRM department and thus involves no participation of all the departments.
- For entry level employees, the selection process of GP is initiated from accepting the CV’s online. The selection process of ABFL does not involve any online application. CV’s are accepted by hand.
- GP conducts oral interviews in special cases, whereas ABFL conducts only oral interviews in its selection process.
- In both companies the appraisal is carried out by supervisors. However, the time period for which performance appraisal is done is different. In GP, appraisal process is normally carried out in December, whereas in ABFL, there is no specified time barrier to complete the appraisal process; the management prefers to evaluate employees on an ongoing process.
- In GP, the appraisal is carried out by using a rating scale which ranks eight competencies. In ABFL the appraisal is also done using a rating scale which is not as structures as Grameen Phone. The scale is designed by top level management.
- The supervisors report orally to top level management in ABFL. Whereas in GP a comprehensive report has to be presented while appraising somebody.
- According to ABFL the major barriers in appraising are external influences and biases. While in GP the main barriers are meeting deadlines and having backdated results.
- Grameen Phone’s HR department conducts employee satisfaction survey to help motivate employee. On the other hand ABFL’s management does not carry out any survey but rather go for meeting with the employees personally.
- ABFL’s management believes in participative management as a motivational tool. GP’s HR department also believes in participative management in the form of setting values for the organization.
- GP’s HR department also carry out customer satisfaction surveys, where as ABFL does not.
- In ABFL both uniform and flexible are provided. While in GP only uniform benefits are provided.
- In GP consultancy is provided for career management. ABFL provides consultancy in career enhancement of personal and organizational skills.
- ABFL provides training as a major incentive for the employee.
- GP conducts workshops for all levels of employees whereas in ABFL no such workshops are initiated.
- ABFL provides job rotation among sister concerns whereas no such methods are adopted in GP.
- In order to reduce stress and tension among employees GP provides flex timing, job tailoring etc. In ABFL job rotation is their main feature in reducing stress and tensions.
- ABFL provides performance based incentives which are hidden from all other employees. Sometimes it is only given to selected people. On the contrary GP provides uniform compensation for all.
- ABFL offer some level of autonomy to the employees in performing their job. In GP no such autonomy is provided.
- ABFL’s philosophy is to provide life time employment which acts as a motivational tool for the employees.
- Both the organizations provide technical tools and resources to the employees. One exception being ABFL provides accommodation to it’s employees serving outside Dhaka.
Reward and Compensation
Both of them provide intrinsic rewards in the form of participative management, goal setting, value determination, etc. ABFL tries to provide an environment of being a family friendly organization. As a result they provide many rewards in the form of appliances or earn benefit leaves to help the families become modernized. GP does not provide such benefits.
The main extrinsic benefits awarded by both these organizations are in the form of cash incentives. GP does not provide any flexible benefits. They are more or less uniform. ABFL more or less provides generalized incentives, but some hidden incentives are given.
None of the organizations have an established compensation administration. In case of GP, the HR director is responsible for allocating and determining these rewards. On the other hand, ABFL’s top level management determines these issues since they have no specialized departments to deal with these matters.
Some valuable recommendations are made by the company managers surveyed. These, with our own recommendations, are given below.
From the Point of View of GP
- Online application for advertising greatly decreases the time and cost required for recruitment. So online advertising should be used whenever possible.
- Communication network is very important to ensure proper communication of job related information within and outside the organization. So an effective communication network should be set up.
- Temporary workers should be employed in jobs consisting of short term projects and surveys, as these jobs are temporary in nature, and recruitment of permanent employees in these jobs will cause wastage in both capital and labor.
- GP does not conduct interviews on its recruitees on a general basis. However, they feel that a comprehensive interview is very important for proper selection process, although they are very difficult to conduct. According to them, a comprehensive interview will increase the probability of selecting successful candidates.
- In appraising an employee a rating scale should be used to measure his competencies.
- In motivating the employees, flexible benefits should be provided.
- Flex timing should be provided to employees to tailor their own work hours.
- Organizational values should be set with the participation of the employees.
- Workshops and assessment centers should be developed for employee training and development.
- Goals should be set by management to motivate employees, and rewards should be awarded to the employees based on the efforts given by them.
From the Point of View of ABFL
- Sometimes external influences can be used for recruiting to maintain good relationships.
- Printed media for advertising should be used as an external recruiting tool to generate wider circulation.
- Job related information should be provided as much as possible in advertisements for recruiting.
- Comprehensive interview as well as a comprehensive written test should be conducted for proper selection
- A family friendly environment should be created in the organization to help motivate the employees.
- The organization should provide as much resources as possible to help motivate the employees.
- Top level management should increase personal contact with the employees in setting goals, motivating, and in turn in appraising.
- Organization should provide as mush training as possible to enhance the carrier of an employee.
- Job rotation should be carried out among the employees in an organization to reduce stress.
- Some autonomy should be provided in the job setting.
- Uniform benefits as well as flexible compensation should be available in an organization simultaneously.
- Hidden incentives, which would be performance based, should be available in an organization.
- Alternative means of compensation should be enforced by management.
- The organizational philosophy should be to provide security, safety, and a means of identity for an employee.
From Our Point of View
- An organization, irrespective of whether it is performing well or not in the industry, should have an established HRM department.
- A compensation administration should be available in the human resource department to deal with the reward and compensations matters of the organization.
- All organizations should go for university placement and intern employment to help young managers to develop their skills.
- Both internal and external sources of recruiting should be utilized, based on the situation.
- Both oral interviews and written tests should be conducted to ensure effective selection.
- Participative management should be implemented in setting goals, appraising, and determining appropriate rewards to augment motivation.
- Both financial and non-financial rewards should be implemented.
- Organizational philosophy should be to provide security and self esteem to the employees.
- Succession planning should be utilized in an organization so that the top level management does not face any difficulty in human resource allocation.
On the other hand, Simmons should go for aggressive recruiting campaign right away. They can make use of college placements as they prefer younger applicants. They can also take help of employment agencies and advertising in different media. All these options may take time to get activated, so employee leasing can be a good alternative under the circumstances.